Tariff shock poses resilience test for investors

Investor sentiment was dominated by fear during the trading session on April 3, as widespread selling pressure negatively impacted nearly all sectors, inadvertently pushing the market into a state of overreaction.

The panic started after US President Donald Trump announced the imposition of higher tariffs on dozens of countries with a trade surplus with the US, including Vietnam, which was among the nations facing the highest reciprocal tariffs of up to 46 per cent.

By the close of April 3, the VN-Index had dropped 6.68 per cent to 1,229.84 points, wiping out all gains from the past two months. This was also the largest decline in the history of Vietnam’s stock market.

The April 4 trading section results. Photo: tinnhanhchungkhoan.vn

On April 4, the VN-Index rebounded to 1,210 points.

Notably, market liquidity remained strong, with trading volume reaching a record high of nearly 2.2 billion shares and the transaction value hitting its highest level in over a year, since the session on March 18, 2024.

Although the market has not fully recovered, the strong inflow of capital in the final trading session of the week shows that investors expect a balanced trend to return soon. This was also a more positive signal before the market resumes trading on April 8.

The White House stated besides the base-line tariff of 10 per cent which would take effect on April 5, higher tariffs, including the 46 per cent rate for Vietnam, would start on April 9. This means that with the possibility of negotiations remaining open, Vietnam still has time to adjust.

Truong Hien Phuong, senior director at broker KIS Vietnam Securities, noted that in the current situation, there are still real bright spots for investors to rely on.

In addition to President Trump’s positive sentiments towards Vietnam expressed through his visits and investments, Phuong also believes in Vietnam's negotiating capabilities, which might help adjust the US tariff rate.

Phuong noted that overselling on the stock market was due to investor fears, not because of any problems with companies themselves.

“The current sell-off is being driven by short-term sentiment, so investors will soon regain their composure, reduce excessive stress, and curb further selling,” said Phuong.

“Investors will choose high-quality tickers with clear business plans and development strategies. At upcoming AGMs, investors will also discuss dividend payment plans, upcoming projects, and other positive information. Therefore, there is no reason to hastily sell good stocks based on unclear information. Such actions are rushed and unnecessary,” advised Phuong.

Phuong also reminded that the Ho Chi Minh Stock Exchange (HSX) is set to launch the KRX trading system, a system developed by Korean Exchange (KRX) with prominent new features, in May.

This is a critical step to upgrading Vietnam’s stock market in the September review, which could attract many global investment funds to invest in Vietnam.

“When this happens, new capital inflows will target good stocks on the market. If investors follow the crowd and sell, they will miss out on good stocks and sell at a loss. I do not think the situation is as severe as it seems, and new signals will help reverse the market trend in the near future,” Phuong said.

Following the tariff announcement, Vietnam has been making efforts to improve the situation.

Prime Minister Pham Minh Chinh chaired a meeting of the government’s Standing Committee on April 3 with various ministries to evaluate the situation and discuss immediate and long-term solutions.

The PM has directed a series of comprehensive, balanced, and effective measures, both short-term and long-term, with the US to promote a balanced and sustainable trade relationship, creating favourable conditions for investors on both sides, and ensuring the legitimate rights and interests of all stakeholders.

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